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Lupin may see new life
Junior mining company expands Nunavut holdings with intention to restart mine

Walter Strong
Northern News Services
Published Monday, February 9, 2015

KITIKMEOT
Stephen Wilkinson, president of Vancouver-based WPC Resources Inc. (TSX.V:WPQ), is bullish on gold.

NNSL photo/graphic

The Lupin gold mine, located southeast of Kugluktuk. In a deal set to close last month, WPC Resources is set to acquire the formerly producing gold mine from Mandalay Resources. - photo courtesy of Elgin Mining Inc.

Bullish enough to ink a deal to acquire a former Nunavut gold mine and get it running again.

Last week, WPC resources reached an agreement with Mandalay Resources Corporation (TSX:MND) to purchase the now inactive Lupin gold mine, located 285 km southeast of Kugluktuk on the western side of Contwoyto Lake, or 400 km north of Yellowknife.

WPC isn't looking to flip the property. Instead, Wilkinson said the plan is to bring the mine back into production.

"Our strategy is to build a significant gold producer, taking advantage of the ongoing market malaise to minimize purchase and capital costs while building on these high-grade and development stage projects," Wilkinson stated in a news release.

Last year, Mandalay Resources picked up the Lupin Mine and nearby advanced stage Ulu gold property in a $70 million cash and stock deal to acquire Elgin Mining Ltd. Among Elgin Mining's assets were the Lupin mine and the Ulu project.

Shortly after Mandalay Resources picked up Elgin Mining, the company announced it had no interest in the Nunavut holdings. Instead, Mandalay Resources was after Elgin Mining's Bjorkdal gold mine in Sweden, a solid gold producer. The company said was looking for a buyer to take Lupin and Ulu.

Last September, WPC Resources made a deal with Mandalay Resources for up to 80 per cent interest in Ulu. The deal carried a $3-million work commitment.

At the time, the deal for Ulu was not connected to the possibility of acquiring the Lupin.

Wilkinson put the purchase of Ulu into context, saying Ulu is a "potential satellite source of mill feed" for Lupin, further supporting the economic case for restarting the mine.

Until 2012, Elgin was using some revenue from Bjorkal to fund a redevelopment of the Lupin mine, which had been operating from 1982 to the

end of 2004, producing more than 3.4 million ounces of gold at a grade of 8.9 grams per tonne.

Elgin stopped redevelopment work at Lupin early in 2013 as gold began the steep decline it has yet to recover from. By June 2013, Gold had dropped to $1,232 per ounce from $1,663 per ounce at the start of the year.

The Lupin mine sits on a 6,756 hectare property. According to a Dec. 31, 2011 NI 43-101 technical report, there is an inferred resource of 403,000 ounces of gold with the possibility of more gold in less explored mineralized formations.

The mill and associated infrastructure -- including a 1,950 metre airstrip, 2.3 million litres of stored diesel and 250 person residential complex - were all decommissioned and remain ready for restart. The mine's type-A water licence - an operating licence- remains in good standing.

According to a 2012 presentation prepared by Elgin Mining, the Lupin mine could be rehabilitated and running within three years of concerted effort.

The 947 hectare Ulu property, located approximately 100 km northeast of the Lupin mine, had changed hands four times between 1989 and 2011 before it was purchased by Elgin Mining. More than $45 million in spending during that time paid for a 1,200-metre gravel airstrip, a 60-person camp, and more than 135,000 metres of surface and underground drilling.

Total indicated and inferred gold resources at Ulu are 417,000 ounces gold, with a cut-off grade of 2.5 grams per ton gold.

WPC Resource's agreement with Mandalay Resources includes $3 million cash and 18 million WPC shares. The transaction is scheduled to close on or before May 15.

WPC Resources also holds 100 per cent interest in the 8,015 hectare Hood River property adjacent to Ulu.

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